Colorado county’s value-based health care strategy produces savings
Health care is always a challenging area for government employers. It can feel like an unsolvable jigsaw puzzle for benefit managers to set strategies that provide robust benefits to keep their employees healthy and productive while also being good stewards of public dollars.
But in Larimer County, Colo., we’re seeing the pieces come together.
Larimer County is situated in North Central Colorado. Home to the city of Fort Collins, we are the sixth most populous county in the state. We employ more than 2,000 people and our self-funded medical plan has more than 3,500 covered lives.
Although the county’s claim to fame is the fact that Main Street in Fort Collins was the inspiration for Disneyland’s Main Street U.S.A., we’re a stand-out community for a much less glamorous reason too. Larimer County is an extremely expensive health care market.
For example, according to data from our partner Healthcare Bluebook, the cost for a colonoscopy in our area can range from a low of about $5,000 to as high as $17,000. We also see a wide variation – 300 percent to 800 percent – in prices across most inpatient and outpatient diagnostic services one might consider “shoppable.”
Unfortunately, we’re not alone. On average, Healthcare Bluebook sees about 650 percent price variability in markets across the country. That’s like paying $16 for a $2.50 gallon of gas — something we’d never do in real life, but in health care we do all the time.
Promoting Value-Based Care
Larimer County forged a partnership with Healthcare Bluebook to tackle this issue head on and find ways to help guide our health plan members to high-value providers — meaning they provide high-quality care at a fair price. In addition to cost, they analyze local health care providers based on their health outcomes, helping employers like us figure out where our employees should be going for care. For example, the data helped us determine that while one nearby hospital is in the 99th percentile for quality outcomes for joint replacement, it ranks poorly for stroke care.
Through our partnership, Larimer County employees use an online tool to shop for care. When they select a provider that is color-coded green, meaning they score well for both quality and costs, they receive a check in the mail for a portion of the overall savings. We’ve found money talks. Members use the tool, they get rewarded and they not only use it again, but also tell their coworkers about it. So far, this shared savings program has produced a return on investment of 340% in its first year.
Because of the high cost of care in our local market, and Colorado broadly, we’ve taken a strong stance with our local health systems to control our health spending. We explain that our data shows they’re charging more than what we would pay if we sent our members to Denver for certain services, and that we’re willing to do that if they can’t work with us on price.
Some of that work is happening through our participation in the Colorado Business Group on Health and the Colorado Purchasing Alliance, a not-for-profit organized for group health care purchasing and direct provider contracting. The Alliance is negotiating contracts directly with hospitals and health care providers, allowing members to leverage their own third-party administrator and value-based plan designs to encourage utilization. We’ve even looked into partnerships with ride-sharing services to help cover the cost of travel when the highest value providers are located outside the county.
In addition, we’ve formed a direct partnership with a physical therapy provider in our community for 2021. Starting in January, our members can get eight visits with this provider at no cost. In exchange for the volume we’re sending their way, the practice is giving us rates that are about a third less than what other PT providers charge. We’re excited about this partnership because we believe PT is preventive care that can help our members avoid more serious injuries and surgery.
In the new year we’ll also launch a pilot program with Healthcare Bluebook in which we’ll eliminate member cost sharing for certain procedures when members choose a high-value, “green” provider. We believe this will be a great incentive to get our employees even more engaged with shopping for their care and making smart decisions about quality and cost. Now, instead of waiting for a check in the mail that might cover what they’ve already spent in co-pays or deductibles, they won’t have to take out their wallet. That’s a compelling benefit given that our health plan typically has a $1,000 deductible and a $6,000 out-of-pocket maximum.
Orienting our benefits toward value-based care has had a positive impact on the county’s health care costs and the quality of care our members receive. I strongly encourage other government employers to seize this moment and take the first steps to better managing employee health benefits and costs. At the end of the day, we have a responsibility to be good stewards of taxpayer dollars by making sure the care we are purchasing is not only high quality, but reasonable and fair. We stress this with our staff, and hope that our footprints may be helpful to our peers.
Jennifer Fairman is the benefits manager for Larimer County, Colorado, where she is responsible for administration of all employee benefits, as well as the County’s on-site health clinic. Jennifer joined Larimer County in 2017 with more than 15 years of experience in HR and benefits management. Contact her at firstname.lastname@example.org, (970) 498-5983 or www.larimer.org.